Updated January 18, 2023
A Nevada non-compete agreement allows a former employee to be restricted from working in the same business for a specific duration and geographical area. The main limitation is that a non-compete cannot cause undue hardship on the employee and is prohibited for hourly workers.
Laws
Legally Enforceable?
Yes, a non-compete in Nevada is legally enforceable if it meets the following conditions:
- Consideration. Must be supported by valuable consideration (such as an employment contract, promotion, compensation, etc.);
- Restraint. Cannot impose any restraint that is “greater than required for the protection of the employer;”
- No undue hardship. Cannot impose an undue hardship on the employee; and
- Appropriate restrictions. Imposes restrictions that are appropriate for the consideration being offered.
Source: NRS 613.195(1)
Hourly Workers (prohibited)
Effective October 1, 2021, hourly workers (exclusive of any tips or gratuities) are strictly exempt from entering into a non-compete agreement.
Source: Assembly Bill 47
Attorneys (prohibited)
Attorneys are not allowed to enter into a non-compete that restricts their ability to practice law in the State.
Source: Opinion of Rule 5.6 (State BAR)
Continued Employment
The continuation of employment has been ruled to be sufficient consideration for an at-will employee.
Source: Camco, Inc. v. Baker (1997)
Maximum Term
The duration and geographical area are judged collectively whether it is reasonable or not. Therefore, if the time period is longer, the geographical area must be smaller, and vice-versa.
Reasonable Cases
- In Ellis v. McDaniel (1979), a duration of 2 years and an area of 5 miles was reasonable.
- In Hansen v. Edwards (1967), a duration of 1 year for the City of Reno was reasonable.
Unreasonable Cases
- In Camco, Inc. v. Baker (1997), a duration of 2 years and 50 miles was unreasonable.
- In Jones v. Deeter (1996), a duration of 5 years and 100 miles was unreasonable.
Blue Penciling
Earlier cases involving non-competes were “blue-penciled” or amended by the courts. Although, in recent times the courts have chosen to deem the entire agreement unenforceable for being too broad or unreasonable.
Source: Shores v. Glob. Experience Specialists, Inc. (2018)
“Noncompetition” Definition
“Noncompetition covenant” means an agreement between an employer and employee which, upon termination of the employment of the employee, prohibits the employee from pursuing a similar vocation in competition with or becoming employed by a competitor of the employer.
Source: NRS 613.195(6)(b)